Airports Land Valuation Workshop Papers - 2 October 2015...2015/10/02 · • The IVS framework was...
Transcript of Airports Land Valuation Workshop Papers - 2 October 2015...2015/10/02 · • The IVS framework was...
A member firm of Ernst & Young Global Limited
Ernst & Young Transaction Advisory Services Limited 100 Willis St, Wellington 6011 P O Box 490, Wellington 6140
Tel: +64 4 499 4888 Fax: +64 4 495 7400 ey.com/nz
Airport Land Valuation Methodology Workshop
Wellington Airport, Sunderland Room
2 October 2015
Purpose
The purpose of this paper is to provide the draft agenda, format and discussion points for the Commerce Commission‘s (Commission) workshop on the IM review airport fast track relating to the application of the MVAU land valuation methodology.
The airports fast track process is intended to be completed by early February 2016. This workshop will be held in the Sunderland Room at Wellington Airport on Friday 2 October 2015.
Background
The Commission has decided to fast track the consideration of airport services land valuation methodology amendments. The land valuation methodology amendments are scheduled to be made available prior to the end of February 2016 so that MVAU land valuations can be prepared consistent with the input methodologies prior to the commencement of the 2017 price-setting consultation.
The scope of the amendments being considered as part of this fast track process is the application of the MVAU airport land valuation methodology. As set out in the Commission’s update on fast track amendments dated 3 July 2015, the Commission will be focusing on:1
• narrowing the potential range of airport land values that can be derived under the requirements, including removing compliance ambiguities;
• updating the airports land valuation requirements so they align to the current valuation standards and valuation industry practices applying in New Zealand; and
• considering when land valuation methodology amendments will apply.
Consideration of the appropriateness of using a MVAU methodology is not within the scope of the fast track process. This is open to be considered as part of the main IM review. This allows consideration of the appropriateness of the methodology alongside the other airport services IMs.
EY has been contracted by the Commission to assist it in updating the airport services land valuation methodology, including:
• preparing drafts of the material required for the workshop;
• facilitating the workshop;
• providing expert advice on issues raised during the consultation process and on proposed amendments to the airport land valuation methodology; and
• assisting the Commission to draft any amendments to the airport land valuation input methodology.
Workshop Objectives
The objective of the workshop is for the Commission to;
• understand stakeholder views on the factors that drive differences in valuation outcomes under MVAU; and
1 Commerce Commission, Input Methodologies Review Process Paper - Update on Fast Track Amendments, 3 July 2015.
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• understand stakeholder views on possible changes to the airport land valuation methodology and land valuation process run by the airports, as driven by sound valuation and economic principles.
Role of the Workshop within the Consultation Process
This workshop is a step in the Commission‘s process for considering amendments to the application of the airport services land valuation methodology. Following the workshop the Commission plans to release the draft land valuation methodology amendments reasons paper and determination for consultation. This is expected to be released in early November 2015.
The workshop will provide an opportunity for stakeholders to share ideas and discuss views related to the airport land valuation methodology. Stakeholders will be provided an opportunity to submit on any matters covered in the workshop as part of the draft decision consultation process. The Commission may provide an opportunity for stakeholders to make written submissions following the workshop but prior to the draft decision on specific topics, but only where it is likely to add value to the draft decision process. The case for providing submissions prior to the draft decision will be discussed on a case by case basis during the workshop.
The planned timetable for updating the airport services land valuation methodology is set out below.
Table 1: Airport services land valuation methodology process
No. Process Step Indicative Timeframe
1 Publication of material for workshop 15 Sep 2015
2 Workshop to discuss airport fast tracked issues, including framework for applying
the MVAU valuation approach
2 Oct 2015
3 Draft decision and amendments Early Nov 2015
4 Submissions on our draft decision and amendments Early Dec 2015
5 Cross-submissions on our draft decision and amendments Mid Dec 2015
6 Final decision and amendments Late Feb 2016
Workshop Agenda and Topics
The workshop will be chaired by Paul Melville (EY) with Commission staff and advisers (EY) attending and participating in the workshop. Commissioners will not be attending the workshop.
The objectives of the workshop are to understand stakeholder views on the factors that drive differences in valuation outcomes and the possible changes to airport land valuation methodology. To meet these objectives we have compiled a draft list of matters for discussion at the workshop. The Commission would like to use the workshop sessions to:
• discuss the draft list of matters including identifying any that are missing or should not be covered by the workshop;
• discuss and understand stakeholder views on the materiality of the issues or group of issues with respect to driving valuation differences;
• discuss and understand stakeholder views on the need to update the land valuation methodology or asset valuation process run by the airports to address or reduce the impact of the issues or groups of issues identified; and
• explore possible changes to the land valuation methodology or asset valuation process to address or reduce the impact of issues identified.
The Commission will be looking for the stakeholders to lead the discussion within the framework above, through a combination of presentations and group discussion.
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Appendix A sets out the Commission‘s draft agenda for the workshop while Appendix B sets out the matters for discussion in more detail.
Workshop Format and Process
The Commission will use a round table type format to allow an open discussion and exchange of information between the key stakeholders. The Commission seeks to canvass a full range of views by inviting presentations from, and discussions with, workshop participants.
Projection facilities will be available should participants wish to use them.
Any thinking or views expressed by Commission staff or its advisors at the workshop are for the purpose of stimulating discussion. The Commission’s formal position will be provided in the draft decision intended to be published in November 2015.
Experts
The Commission expects that experts attending the workshop will do so as impartial experts in their fields rather than as an advocate for any particular party.
Confidential Information
The Commission‘s does not intend to hold any closed sessions for participants providing confidential information during the workshop. If parties wish to discuss confidential information at the workshop, please advise Hamish Groves at the Commission on 04 924 3600 by 21 September 2015.
Workshop Recording
The workshop will not be recorded or transcribed. High level minutes will be taken at the workshop and published on the Commission’s website.
Registering Attendance and Contact
The Commission requires all persons attending the workshop to register. To register, please email the Commission at [email protected] with the information outlined in the table below. If you have any questions please contact Hamish Groves on 04 924 3888 or at [email protected].
No. Names of attendees (including experts)
Email addresses of attendees
Dietary Requirements (if any)
Technology Requirements (if any)
1
2
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Appendix A: Draft Workshop Agenda – Location: Wellington Airport Sunderland Room
Ref Start Session Topic Duration
1 9.00 Introduction and Welcome 5 minutes
2 9.05 Agenda and Purpose
• Overview of the workshop agenda
• Overview of the purpose of the workshop
10 minutes
3 9.15 Role of Information Disclosure
• Role of information disclosure and relationship with pricing
15 minutes
4 9.30 MVAU Framework
• Role of Specified Airport Services Input Methodologies Schedule A (guidance or prescriptive)
• Schedule A and valuation standards
30 minutes
5 10.00 Drivers of Valuation Variations
• Issues or ambiguities in Schedule A driving variations in valuation
• Options for removing or reducing ambiguities in Schedule A
60 minutes
11.00 Morning Tea 15 minutes
6 11.15 Key Airport Inputs
• Fact sheet for airport land information and other relevant inputs
• Process for determining agreed fact sheet
30 minutes
7 11.45 Highest and Best Alternative Use Plan
• Process for developing HBAU plan
• Demand, timing and other analysis required to develop HBAU plan
• Reducing ambiguities associated with HBAU
75 minutes
1.00 Lunch 60 minutes
8 2.00 Highest and Best Alternative Use Plan (continued)
• Process for developing HBAU plan
• Demand, timing and other analysis required to develop HBAU plan
• Reducing ambiguities associated with HBAU
30 minutes
9 2.30 Consistency and Transparency
• Use of consistent valuation model (software) across airports
• Use of consistent reporting schedule approach across airports
• Explanation and reconciliation of changes in valuation over time
• Explanation and reconciliation of differences between MVAU land valuations and valuation information contained in information disclosure
• Supporting information for market based inputs
60 minutes
3.30 Afternoon Tea 15 minutes
10 3.45 Divergence in MVAU Outcomes
• Reasonable range of MVAU outcomes
• Need for a process to resolve difference outside range
30 minutes
11 4.15 Valuation Changes Resulting from Changes to the IM
• Treatment of historic valuations, future valuations and effect on ROI
30 minutes
12 4.45 Wrap Up
• Further information required and next steps
15 minutes
5.00 Workshop close
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Appendix B: Key Components of Asset Valuation Methodology for Discussion
Agenda Ref
Issue Workshop Objective Discussion Points
3 The structure and direction provided by
Schedule A to the Specified Airport Services
Input Methodologies Determination 2010
(Schedule A).
Understand stakeholder views on the
structure, and direction provided by,
Schedule A and possible changes
driven by current standards.
Discuss the role of Schedule A including the level of guidance and/or direction
to be included.
Discuss changes in valuation standards and the potential impact on Schedule
A, including:
• Schedule A (A3 – Professional Valuation Framework) refers to IVS 2
Bases Other Than Market Value; IVS 3 Valuation Reporting; IVGN 1 Real
Property Valuation; and ANZVGN 1 Valuation Procedures Real Property.
• The IVS framework was restructured in 2011 and again in 2013. IVS 2
was deleted with the terminology “Bases Other than Market Value”
removed and subsumed into the IVS Framework. IVS 3 was replaced with
IVS 103 Reporting.
• The concept of IVS 2 is now Market Value with Special Assumptions,
effective 2011.
• Special Assumptions are defined as ‘an assumption that either assumes
facts that differ from the actual facts existing at the valuation date or
that would not be made by a typical market participant in a transaction
on the valuation date’ (Source : Definitions – IVS 2013). This seems to
cover the HBAU / MVAU need for the valuation of the airports.
• It is not anticipated that the restructuring of the IVS will have an impact
on the valuation opinion or the methodology used to determine the value
but we are seeking feedback from stakeholders to that effect.
• It is expected that Schedule A be redrafted to reflect the changes in IVS
and ANZVGN and the wording and terminology used in valuation reports
be amended in the future to accord with current professional valuation
guidance.
• We are seeking feedback as to whether A4, A5, A6 and A7 could be
replaced by the rewording of A3 to the effect that the valuations ‘must
accord with IVS and ANZ Property & Valuation Standards’ thus removing
the issue of Schedule A becoming out of date due to changes in
standards.
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Agenda Ref
Issue Workshop Objective Discussion Points
4 Ambiguities in Schedule A which is resulting
in material valuation differences.
Understand stakeholder views on the
key ambiguities within Schedule A.
Discuss rules that are driving material differences in valuation. This would
include treatment of airport land zoning and associated costs within the
Highest and Best Alternative Use (HBAU) plan.
5 Difference in the understanding of the facts
of each airport.
Understand stakeholder views on the
need for a published set of valuation
related facts for each airport.
Discuss whether there would be benefits from each Airport preparing and
publishing standard fact sheets on airport land which can be used in the
valuation.
6&7 The HBAU plan and hypothetical subdivision
costs.
Understand stakeholder views on
whether there would be benefits from
separating the development of the
HBAU plan and subdivision costs from
the valuation process and agreeing the
HBAU ahead of the valuers being
instructed.
Discuss whether there would be benefits from having a separate process for
the development and agreement of the HBAU plan and subdivision costs prior
to the valuer being instructed. The process could consist of airports releasing
the HBAU plan and subdivision costs to stakeholders for consultation on a
cycle that reflects possible material change to the HBAU assumptions (less
regular than valuation cycle).
Discuss the level of economic analysis relating to market demand and the
time period for the sale or realisation of the developed land.
8 Different valuation results arising from
valuation models.
Understand stakeholder views on a
standard valuation model (software)
across the airports.
Discuss whether there would be benefits from developing and using a
consistent valuation model (software) used by all valuers to enable better
comparison between valuers, airports and valuation dates.
8 Inconsistent report formats between valuers
is resulting in a lack of clarity as to how the
valuation results were reached.
Understand stakeholder views on
improvements in report formatting to
allow for better understanding of
valuations.
Discuss whether there would be benefits from preparing a schedule which the
valuation must produce as part of the valuation report so key valuation inputs
and results could be better understood.
8 Explanation and reconciliation of changes to
valuations over time.
Understand stakeholder views on
greater levels of transparency relating
to how valuations change over time.
Discuss whether there would be benefits from amending the IMs to instruct
the valuer to provide an explanation as to why and where the valuation has
changed from the prior valuation report. Areas could include changes in
assumptions, facts and market movements.
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Agenda Ref
Issue Workshop Objective Discussion Points
8 Explanation and reconciliation between the
MVAU land valuation and the information
disclosure.
Understand stakeholder views on
greater levels of transparency relating
to any differences between MVAU land
valuation and the valuation
information contained in information
disclosure.
Discuss whether there would be benefits from amending the IMs to require a
reconciliation and explanation of any differences between the MVAU land
valuation and the valuation information contained in information disclosure.
8 Lack of supporting information on market
based inputs.
Understand stakeholder views on
improving the supporting information
for market based inputs used by the
valuers.
Some of the reports sampled appear to include a good level of support for
market based inputs on revenues, but analysis of other key drivers such as
market absorption rates is less rigorous. In some cases there is limited
analysis or support for discount rates / profit and risk factors.
Discussion on the benefits of providing further information to support market
based inputs.
9 Divergence of expert opinions. Understand stakeholder views on what
is an acceptable variation in MVAU
outcomes and whether there needs to
be a process to resolve variations
outside this range.
It is reasonable to expect that all experts (planners, engineers, valuers) will
have a divergence of professional opinion. Given this we would like to
discuss:
• what is a reasonable range of MVAU outcomes and is it necessary to put
a framework in place to resolve variations outside the range.
• whether the difference in MVAU would be reduced to an acceptable level
if the inputs to the MVAU (airport facts, HBAU plan, treatment of zoning
costs) calculation could be agreed; and
• whether the valuers would benefit from being made aware of the
divergence in opinion on the HBAU plan.
10 Treatment of valuation changes resulting
from changes to the IM.
Understand stakeholder views on how
to treat valuation changes resulting
from changes to the IMs.
Discussion on how changes to airport valuations resulting from changes to
the IMs might be treated, including whether previous valuations might be
updated to reflect the latest rules and how they might be handled in terms of
the airports profit and loss statement.
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Appendix C: Workshop Attendees
# Representing Name Position Email Address
1 Auckland Airport Adrienne Darling Acting Head of Regulatory and Pricing [email protected]
2 Auckland Airport Michael Graham Manager Finance [email protected]
3 BARNZ Dougal Smith- Expert - Property Advisory
Registered Valuer [email protected]
4 BARNZ Mike Foster – Expert - Zomac Planning Solutions Ltd
Director [email protected]
5 BARNZ John Beckett Executive Director [email protected]
6 BARNZ Kristina Cooper Legal Counsel [email protected]
7 BARNZ Sean Ford Manager Aeronautical Suppliers [email protected]
8 Christchurch Airport Andrew Souness Regulatory and Asset Accounting Manager [email protected]
9 Christchurch Airport Tim May Chief Financial Officer [email protected]
10 Commerce Commission Hamish Groves Consultant [email protected]
11 Commerce Commission John McLaren Manager, Compliance and Performance Analysis
12 Commerce Commission Stephanie Dwan Project Administrator [email protected]
13 Commerce Commission Florian Steinebach Senior Analyst [email protected]
14 EY Paul Melville Associate Director [email protected]
15 EY Richard Bowman Partner [email protected]
16 EY Abhay Padia Senior Consultant TAS [email protected]
17 NZAA Christopher Graf Senior Associate [email protected]
18 NZAA Kevin Ward Chief Executive [email protected]
19 NZAA Kieran Murray [email protected]
20 NZAA Chris Stanley [email protected]
21 NZAA Richard Chung [email protected]
22 NZAA Mike Basher [email protected]
23 NZAA Craig Shrive [email protected]
24 Wellington Airport Martin Harrington Chief Financial Officer [email protected]
25 Wellington Airport Meena Parbhu Legal Counsel [email protected]
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Disclaimer
The purpose of the Airport Land Valuation Methodology Workshop paper is to set out the draft agenda, format
and discussion points for the Commission’s workshop on the IM review airport fast track relating to the application
of the MVAU land valuation methodology. EY accept no responsibility whatsoever for reliance on this report other
than for the purpose for which it was intended.
Reliance on Information
In forming this report, EY has relied on information provided by the Commission. Our duties, while involving an
assessment of information provided and commenting as necessary, do not extend to verifying the accuracy of the
information, and EY have assumed its authenticity and completeness.
Review of report
EY reserves the right, but is under no obligation, to review any assumptions included or referred to in this report
and, if EY consider it necessary, to revise our report in light of any information, inaccuracies, or alterations to the
information provided that are relevant to this report, which was in existence and becomes known to us after the
date of this report.
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Personnel CV
Richard Bowman Partner Valuations and Business Modelling Office: Melbourne
Email: [email protected]
Richard is a Partner in our Real Estate Advisory team. Richard has in excess of 20 years property
experience, specialising in financial due diligence, capital and rental valuations of commercial, industrial
and retail properties for acquisition, annual reporting and strategy purposes.
Key clients and significant engagements
SACL – Valuation of Investment Property and Terminal Buildings, Sydney Airport, 2014.
Canberra Airport Group – Valuation of investment properties including terminal buildings and carparks
for financial reporting and bank finance purposes, 2014..
Port of Melbourne - Rental determination and valuation experience on leasehold properties around the
port, including Swanson Dock West, Pier 35, South Wharf, Footscray Road, West Melbourne and the
Dynon Freight Terminal.
Moorabbin Airport - Valuation of Moorabbin Airport for dispute resolution purposes and provided
expert advice on the workings of a profit share arrangement.
Tasmanian Gateway Corporation - Conducted valuations of Hobart Airport over a two year period for
fair value accounting purposes. Assets comprised land and buildings (operational, buffer,
environmental, investment and surplus).
Westralia Airports Corporation – valuation of land.
Moorabbin Airport, VIC – Valuation for dispute resolution purposes and provision of expert advice on
the workings of a profit share arrangement.
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Introduction and Welcome 02 October 2015
John McLaren
Airports IM review Land Valuation Workshop
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2
Introduction and Welcome
Commerce Commission
John McLaren – Introduction and Welcome
Hamish Groves
Florian Steinebach
Ernst and Young
Paul Melville – Workshop facilitator
Richard Bowman – Expert valuer
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Role of Information Disclosure 02 October 2015
Hamish Groves
Airports IM review Land Valuation Workshop
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4
Setting the scene Overview of regulatory
framework and how this
workshop fits into regime
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Relevant Airports Regulation
5
Commerce Act 1986
o Auckland, Wellington and Christchurch airports
o Information disclosure regulation only
o Subject to Part 4 regulation since 2008
Airport Authorities Act 1966
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6
To ensure sufficient information
is readily available to interested
persons to assess whether the
purpose of Part 4 is being met
Purpose of information disclosure
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IM Review and the fast track process
7
• Statutory requirement to review IMs every 7 years
• Fast track amendments focused on targeted issues for amendment and are considered on a different timeframe from the overall IM review
• Airport fast track process is focused on application of the MVAU land valuation methodology
• The fast track amendments will be completed and re-integrated back into the overall IM review process prior to the draft decision
• Amendments to be available to be used well in advance of the 2017 price setting events
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Valuation Changes Resulting from Changes to the IM
02 October 2015
Hamish Groves
Airports IM review Land Valuation Workshop
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Overview of issue
9
• Potential for valuation changes resulting from changes to the IM requirements
• Under the current requirements any change in valuation affects
• Regulatory asset base; and
• Regulatory profit through non-indexed revaluations
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Discussion points
10
Areas for discussion Discussion points/questions?
1. Effective date for changes in the valuation requirements
• Should changes be effective from • beginning of regime; • the date of the amendment determination; or • the next valuation date?
• Should the original valuation be used in the profitability assessment until the effective date of the change?
• MVAU valuations are currently optional, should one be required so that the changes become effective by a certain date?
2. Regulatory profit treatment
• If the IM change results in a change in valuation, how should the resulting change in value be recognised in regulatory profit?
• Should there be a distinction between changes in valuation resulting from the removal of ambiguity and changes in policy?
• Do we need to separately identify the effect of non-compliance with original requirements?
3. Identifying changes in valuation resulting from changes to the IM
• How can valuation changes resulting from changes to the IM be separately identified from other valuation changes?
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Main IM review process 02 October 2015
Hamish Groves
Airports IM review
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Main IM Review – suggested steps
12
Indicative Timing Draft consultation step
16 Oct 2015 Workshop 1 email notification
Mid/late Oct 2015 Detailed process update
Week beginning 26 Oct 2015
Publication of workshop 1 agenda and papers
Week beginning 16 Nov 2015
Airports main IM review workshop 1 • Approach to airports profitability assessment • Application of WACC
Nov 2015 Draft decision - airports fast track
Dec 2015 Submissions and cross submissions – airports fast track
Feb 2016 Final decision – airports fast track
Early Feb 2016 Confirmation of date for workshop 2
Feb/Mar 2016 Publication of Workshop 2 agenda and papers
Feb/Mar 2016 Airports main IM review workshop 2 • Agenda to be confirmed
May 2016 Main IM review draft decision, reasons and amendments
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CC Valuation Workshop 2 October 2015
DISCUSSION OF HOW ZONING CHANGES SHOULD BE REFLECTED
IN MVAU SCHEDULE A VALUATIONS
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CC Valuation Workshop 2 October 2015
THE ZONING ISSUE – BARNZ’S VIEW
• Schedule A requires the valuer to consider the costs of obtaining any necessary changes to zoning or designations to allow the land to be converted to its alternative use
• Schedule A clearly specifies that the starting point is the aeronautical zoning or designations
• The direct and indirect costs of obtaining the necessary zoning changes are part of the costs of developing the land and need to be reflected in the valuation
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THE ZONING ISSUE – WIAL’S VIEW
• WIAL says Schedule A requires the assumption that the land is already zoned similar to surrounding areas and not zoned as an airport
• This is because the valuation should not recognise the existing presence of airport
• Required planning period should range from:
– Nil as no planning changes required
– 12 – 16 months for a board of inquiry process
• WIAL allowed 9 months for planning changes
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SCHEDULE A9 PRACTICAL VALUATION REQUIREMENTS
A9 Practical Valuation Requirements states that in undertaking an MVAU valuation the valuer must …
(b) have regard to designation, zoning and other district plan and legal requirements applying to the land.
The explanatory notes to A9 state:
(4) The land is likely to be designated or zoned for the various aeronautical activities of the airport owner. In addition to considering the likely alternative uses for the land, the valuer should also consider the likelihood of the designation being uplifted or the land rezoned, and costs (if any) likely to be involved in this. (emphasis added)
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SCHEDULE A 10 MVAU VALUATION STEPS
A10 MVAU Valuation Steps states that in undertaking an MVAU valuation the valuer must: (c) Determine the existing or underlying zoning of the land or designations and the likely zoning of the land for the highest and best alternative use, including the likelihood of zoning change or uplifting designations. (e) Consider resource management (including reserve) requirements (f) (iii) determine the direct costs of developing the land, including but not limited to roading, supply of services, legal, sales costs etc (f) (iv) determine any indirect costs of developing the land, eg the developer’s holding costs, local authority rates etc
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COMMERCE COMMISSION PEER REVIEW RECOGNISED ZONING COSTS
• Darrochs was commissioned by the CC to undertake a peer review of WIAL’s 2009 and 2011 valuations.
• Darrochs concluded WIAL’s 2009 and 2011 valuations did not comply with the requirements of Schedule A with respect to taking into account zoning requirements, specifically because of: – A lack of consideration of costs or likelihood of
obtaining planning changes
– Use of an insufficient 7 year development period (Darrochs considered 10 years or longer required)
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OTHER AIRPORTS ALLOWED FOR ZONING CHANGES
• AIAL allowed one year to obtain planning changes for the first stage of its development. Other stages were adjusted to reflect their deferment over total 17 year sell-down period.
• CIAL made an adjustment to its valuation of $50m to reflect the costs, time and risk of obtaining planning changes
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ZONING COSTS RELEVANT UNDER IVS STANDARDS
• IVS standards require that an asset’s market value be determined with reference to comparable market evidence in their highest and best use. – This is “..the use of an asset that maximizes its potential and that is possible, legally
permissible and financially feasible.”
• The highest and best use shall be: – For continuation of an asset’s existing use or for some alternative use
– Considered possible by a prudent market participant
– Legally permissible
– Financially feasible and generate sufficient return after taking into account all costs of conversions to that use.
• The IVS standards require all valuation inputs be established by reference to comparable market based evidence. Valuation inputs and benchmarks may be obtained from – Transactional evidence,
– Historical supply and demand analysis
– Third party expert advice (planning, HBAU, development costs etc)
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CC Valuation Workshop 2 October 2015
REAL WORLD EXAMPLES SUPPORT 2 TO 3 YEARS
• Beachlands Village Business Centre ($220m value) Rezoning and Consenting
• Hobsonville Village Centre ($150m value) Rezoning and Consenting
• Vinegar Lane mixed use, residential,offices, and retail ($250m value) Consenting
• Albany Town Centre ($120m value) Consenting
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9 MONTHS ALLOWANCE FOR WIAL INSUFFICIENT
• The time allowed to obtain zoning changes must reflect the extent of the changes being sought and likely community acceptability
• WIAL’S alternative use described by its own planning experts as ‘a game changing proposition that would force the entire planning of Southern Wellington to be reviewed’.
• WIAL’s 9 month allowance insufficient
• Legal and planning advice received by BARNZ is that 2 to 3 years is realistic
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CONCLUSION
• Schedule A directs that existing airport land zones is the starting point
• The valuer must determine what zoning changes are required for the alternative use and the likelihood of obtaining these.
• The direct and indirect costs of obtaining any necessary zoning changes must be taken into account.
• Direct costs include council, legal and specialist costs to obtain the zoning changes.
• Indirect costs includes the developer’s holding costs while the zoning changes are obtained.
• The time allowed to obtain the zoning changes must be realistic in light of the proposed alternative use.
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CC Valuation Workshop 2 October 2015
HBAU PROCESS
• HBAU plan and valuation iterative therefore need to occur simultaneously to assess what use is highest and best
• Independent economic analysis of the supply and demand for various land uses is required as an initial step to determine: – What alternative land uses are justified and feasible? – What development and sell-down period is appropriate and financially
feasible?
• The economic analysis needs to include quantitative consideration of: – Likely population size of development – Likely catchment area for any retail, business or industrial activities – Employment projections for the development – Current and future demand for residential, retail, business, industrial
or other proposed activities – Likely absorption rates for sales in the development
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CC Valuation Workshop 2 October 2015
CONSISTENT REPORTING – VALUATION REPORT
• Valuation report should remain key information source
• Recommend expanding A10(j) guidance on content of valuation report
• Potential useful additions to valuation reports – Executive summary
– Explanation of changes over time
– Economic analysis supporting supply and demand assumptions
– Evidence or explanations underlying the adopted development costs
Airports Land Valuation Workshop Papers -2 October 2015
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CC Valuation Workshop 2 October 2015
CONSISTENT REPORTING – DISCLOSURES
• Summary disclosure of key outputs of valuation can usefully supplement but should not replace valuation report
• Explanation and reconciliation by airport of any differences between valuer’s MVAU valuation and the disclosed RAB land valuation would be useful
Airports Land Valuation Workshop Papers -2 October 2015
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CC Valuation Workshop 2 October 2015
CONSISTENT REPORTING – DISCLOSURE SCHEDULE
• A disclosure schedule would give interested persons easy access to the key valuation outputs
• Potential matters for inclusion: – Land area
– Average per ha value adopted
– Allocation of value across RAB if this is varies for different land areas
– Short explanation of valuation methodologies adopted
– Quantification of change over time in total and per ha
– Short explanation of key reasons for change
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